With rising inflation affecting households across the United States, many retirees are eagerly awaiting news about the 2025 Cost-of-Living Adjustment (COLA) for Social Security.
The COLA helps protect the purchasing power of Social Security benefits by ensuring they increase with inflation.
For 2025, the Senior Citizens League estimates a modest 2.5% COLA, the smallest in four years. However, not all retirees will see the same dollar increase, and those at certain ages may receive the largest payments.
How Does COLA Work?
The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine annual COLA increases.
The COLA ensures that Social Security benefits rise in line with inflation, maintaining retirees’ ability to purchase necessary goods and services.
While the percentage increase applies uniformly to all recipients, the nominal-dollar increase varies based on the amount of each recipient’s monthly benefit.
Who Will Receive the Biggest COLA Payments in 2025?
According to historical trends, retirees aged 70 will likely receive the largest nominal-dollar COLA increases in 2025. This is because 70-year-olds tend to receive the highest monthly Social Security payments, thanks to a combination of factors like delaying benefits and accumulating higher lifetime earnings.
Why Age 70 Retirees Get the Largest COLAs
Retirees who wait until age 70 to start receiving Social Security benefits generally receive the largest monthly payments. This is due to how Social Security benefits are calculated:
- Lifetime Income: The SSA calculates benefits based on a person’s 35 highest-earning years. People who delay claiming Social Security until 70 often have higher lifetime earnings and contributions.
- Delayed Retirement Credits: While you can start receiving Social Security as early as 62, your benefit increases the longer you delay. If you wait until 70, you get 8% more for each year past your Full Retirement Age (FRA), which maxes out at 70.
Thus, because age-70 retirees have higher base benefits, the 2.5% COLA results in a larger dollar increase compared to those who started receiving benefits earlier.
Example: COLA for Age 70 Retirees in 2025
- The average Social Security benefit for retired workers in September 2024 was $1,920.
- With a 2.5% COLA, the average benefit would increase by $48 in 2025.
However, for those who waited until 70 to claim Social Security, the average benefit was $2,068. With a 2.5% COLA, these retirees would receive an additional $51.70 per month, resulting in the largest nominal-dollar increase.
How Benefits Vary by Age
Based on the SSA’s biennial report (as of June 2024), retirees receive varying Social Security benefits depending on when they claim. Here’s a breakdown:
| Age | Average Monthly Benefit (2024) | Projected COLA Increase (2.5%) |
|---|---|---|
| 62 | $1,440 | $36 |
| 65 | $1,775 | $44.38 |
| 67 | $1,950 | $48.75 |
| 70 | $2,068 | $51.70 |
| 75+ | $1,800 | $45 |
As the chart shows, retirees aged 70 typically receive the highest benefits, meaning they also get the largest nominal-dollar increase from COLA adjustments.
After age 70, benefits tend to decrease slightly as inflation becomes the main factor influencing payments, since wages typically grow faster than inflation for new Social Security recipients.
Why Retirees at Age 70 Get the Largest Benefits
At age 70, Social Security retirees typically receive the biggest payouts due to:
- Delayed Claiming: Those who wait until 70 to claim Social Security receive delayed retirement credits, which boost their monthly payments. After 70, there is no further advantage in delaying.
- PIA and COLA Adjustments: The Primary Insurance Amount (PIA) is adjusted annually for inflation through COLA, whether the person has claimed Social Security or not. Thus, those who delayed benefits continue to see their potential payout increase.
- Longer Work Histories: Many age-70 retirees have higher lifetime earnings, contributing more to Social Security and receiving higher benefits as a result.
COLA Impact Beyond Age 70
While age 70 marks the peak for the largest benefits, retirees continue to receive COLA adjustments even after they begin receiving benefits.
However, after 70, inflation becomes the sole factor affecting payment increases, since additional work or delaying Social Security no longer boosts benefits.
In 2025, the 2.5% COLA increase will likely result in $48 more per month for the average Social Security recipient.
However, those aged 70—who typically receive the largest monthly payments—will see the biggest dollar increase. Their benefits, averaging $2,068, will increase by $51.70 per month due to COLA.
For retirees, this small boost is important for maintaining purchasing power in the face of rising costs, especially as inflation continues to affect daily living expenses.
FAQs
Who gets the largest Social Security COLA payments in 2025?
Retirees aged 70 typically receive the largest Social Security payments and will therefore see the biggest nominal-dollar COLA increases.
How is the Social Security COLA determined?
The COLA is determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation. The Social Security Administration adjusts benefits annually based on this index.
How much is the COLA for 2025?
The Senior Citizens League estimates a 2.5% COLA for 2025, although the final amount will be announced after the Labor Department releases September inflation data.
Why do age 70 retirees get the largest benefits?
Retirees who wait until 70 to claim Social Security receive delayed retirement credits, which boost their monthly benefits by 8% per year past Full Retirement Age.
What happens to Social Security benefits after age 70?
After age 70, there is no incentive to delay claiming Social Security further. Benefits are adjusted only by COLA, with no further increases from working or delaying benefits.
